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Paul Krugman devoted his column two weeks ago to the conduct of economic punditry as if the economy were a nineteenth century morality play: sermons about “debasing” the currency, longings for gold, fretting over inflation at the nadir of an economic crisis, a masochistic enthusiasm for “belt tightening” (“Misguided Monetary Mentalities,” The New York Times, 12 October 2009, p. A23). Taking off from this, Matthew Yglesias makes the point about the degree that class-parochial interests play in purportedly objective economic analysis (“The Monetary Hawks,” ThinkProgress, 12 October 2009):

… I would suggest that divergent analysis is in part driven by things that have relatively little to do with analysis. … if we have four or five years of near-zero inflation and 9-10 percent unemployment that will be fine for prosperous middle aged people and devastating to the interests of the poor and the young. Conversely, if we have four or five years of modest unemployment with four or five percent inflation, that will be fine for young people and poor people but potentially detrimental to the interests of wealthy people sitting on large piles of savings. Ultimately, I don’t think it helps the progressive cause to ignore the class / ideological elements to this dispute and just pretend to be engaging in a neutral technocratic dispute about the correct application of the Taylor Rule. What we’re talking about, after all, is decision-making under conditions of moderate uncertainty. What the hawks are proposing to do is to implement a policy that’s extremely attentive to minimizing downside risk to the currently wealthy whereas Krugman is proposing a policy that’s [attentive] to minimizing downside risk for people with below-average labor market prospects.

The problem is that we’ve adopted a manner of speaking about economic issues denuded of any mention of interest. The language of popular economics today is categorical: a strong dollar is good, a week dollar is bad; stable prices are good, inflation is bad; low unemployment is good, high unemployment is bad; rising house prices are good, stagnating or falling house prices are bad; et cetera. But none of these factors are categorically good or bad (few things in life are). What is omitted is the “for whom” of these characterizations of good and bad. Low employment may be good for job seekers, but high unemployment is good for employers: they have their pick of workers when hiring and they hold the majority of the bargaining power in wage negotiations. A strong dollar may be good for Wal Mart and their customers, but it’s bad for General Motors and their employees.

Real estate maintains some knowledge of contraposition with their talk of a buyers’ market versus a sellers’ market. We do not speak with a similar respect to the value of the dollar: of an investors’ dollar (strong) versus a producers’ dollar (weak) or an importers’ dollar (strong) versus an exporters’ dollar (weak). Or in employment, some people might think getting a raise or ease in finding a job are good, but these are what someone else might call labor price inflation (bad).

Economics isn’t free of the language of interest per se, so much as of one particular set of interests. The propaganda victory of the economic interests of Wall Street, the investing class, large business is so complete that their economic preferences have become de facto the whole language of economics. The awareness of the interests of all other economic actors has been totally expunged from the language of economics — well, not totally: there is the disciplinary ghetto referred to as heterodox economics, an exception that proves the rule.

To have asserted control over the linguistic territory is to have banished the political dispute; to have disappeared from the lexicon is to have ceded political legitimacy. Disputes over the political mixture of the interests of one economic class versus those of another are no longer about one set of economic relations versus another, but now take place in the frame of a rational economic order versus chaos, unreason and decline.

A firm separation between economics in its positivist, scientific role and economics in its normative, polemical and political role should be vigorously policed. Or perhaps economics is simply to value-laden, too embedded in the hurly-burley of human affairs for such a division to be tenable. Perhaps we should dispense with the notion of economics as a hard science in favor of a thoroughgoing political-economy. Even if we admit the possibility of a purely positivist economics, all that economics can do in our political deliberations is serve as a speculative tallyman of the opportunity costs of various policy options. The primacy of politics should come to the fore whenever economics crosses over from the academy to the public realm.

Target values for economic factors represent a political compromise between contending societal factions. The most well known of these is the NAIRU, the trade-off between inflation and unemployment codified in the statutory guidance of most of the world’s central banks. But inflation isn’t an unqualified evil. Its primary evils are that it has a tendency to run-away and, related, that it breeds uncertainty (a certain anticipatable regularity to the future is necessary to the function of capitalism). It used to be well known amidst the working (and indebted) classes that a certain amount of inflation served their interest and that “sound money” was merely the rallying cry of the investor class. The class conflict of easy versus sound money used to be a significant fault line separating progressive from conservative, populist from whig. Hence the advocacy of arch-populist William Jennings Bryan of an inflationary policy of bimetallism or “free silver” in the election of 1896.

There’s talk today about how vile it would be for the government to attempt to inflate away its debt (“debasing the currency” they call it), but the government doesn’t only inflate away its debt, it inflates away all dollar-denominated debts. A couple of years of higher than target inflation might be good for a country that has seen twenty years of galloping gains for the investor class, but racked up unsustainable amounts of debt among the middle and working classes. The investing class would scream bloody murder, but not because 3-5% inflation would be the end of economic reality as we know it, but because it would be a wealth transfer from creditor to debtor.

That’s a lot of fretting over robots for one week. Even 25 years after The Terminator (IMDB | Wikipedia), the robot apocalypse has remained a pretty geeky fantasy / disaster, but I would say that it’s approaching NBC (nuclear, biological, chemical) / CERN accidentally creating a mini-black hole level consciousness as a destroyer of humanity. Now if we could just gin up a little more fear over nanotech / grey goo / ecophagy / ice-9.

“My research hypothesis is that intelligent robots can behave more ethically in the battlefield than humans currently can,” said Ronald C. Arkin, a computer scientist at Georgia Tech, who is designing software for battlefield robots under contract with the Army.

…

In a report to the Army last year, Dr. Arkin described some of the potential benefits of autonomous fighting robots. For one thing, they can be designed without an instinct for self-preservation and, as a result, no tendency to lash out in fear. They can be built without anger or recklessness, Dr. Arkin wrote, and they can be made invulnerable to what he called “the psychological problem of ‘scenario fulfillment,’ ” which causes people to absorb new information more easily if it agrees with their pre-existing ideas.

His report drew on a 2006 survey by the surgeon general of the Army, which found that fewer than half of soldiers and marines serving in Iraq said that noncombatants should be treated with dignity and respect, and 17 percent said all civilians should be treated as insurgents. More than one-third said torture was acceptable under some conditions, and fewer than half said they would report a colleague for unethical battlefield behavior.

Troops who were stressed, angry, anxious or mourning lost colleagues or who had handled dead bodies were more likely to say they had mistreated civilian noncombatants, the survey said [Mental Health Advisory Team IV, FINAL REPORT, Office of the Surgeon General, United States Army Medical Command, 17 November 2006].

It is incorrect to imagine machines as behaving more ethically than humans insofar as it construes humans and machines as occupying the same ethical continuum. We may program machines to have human-compatible ethics, but that shouldn’t confuse us; the same ethical prohibitions that apply to us will not apply to robots.

Right and wrong aren’t something floating out there on the other side of the sphere of the stars. Right and wrong are derived from the characteristics of the human body, human tastes and tendencies as endowed in us by our natural history, the structure of the human lifecycle, our conceptions of the good life, shared human experience, and communal mythos. Creatures for whom these factors are different will have different ideas about right and wrong. As the last three items on the list — conceptions of the good life and shared experience, public reference symbols — differ among people, we have different ideas about right and wrong. A creature with a transferable consciousness won’t have an essentialist view of the relation of body to self and hence won’t take moral exception to bodily damage. A creature with a polymorphous consciousness wouldn’t disparage even psychic damage (though the question of identity for such a creature would be even more difficult than it is with us, as already elusive as we are).

Creatures with different conceptions interacting have to develop ethical interfaces. The minimalist limitations of rights-based liberalism and the law of nations are to some extent that: interfaces between differing moral systems — the former an interface for people within a society, the latter between different societies. What an interface between different species, or an interface between different types of life, would look like, I have no idea. Whether such an interface is even possible is perhaps more pressing: they only seem to hold up so well amidst humans.

Neil Sinhababu, “the Ethical Werewolf,” and Ramesh Ponnuru had a go-round back in 2006 that touched on the ethical status of non-human creatures, but I don’t think it really goes beyond the natural extension of liberalism to different physical morphologies, with which liberalism has an extensive history in the various rights movements. And different physical morphologies is all that aliens and other mythological creatures, as conventionally conceived, are (Sinhababu, Neil, “Mind Matters,” The American Prospect, 23 August 2006; Ponnuru, Ramesh, “Fear Not, Frodo,” National Review Online, 28 August 2006; Sinhababu, Neil, “More on Minds,” TAPPED, 30 August 2006).

As a part of my Whig Liberalism, I believe that Congressional supremacy is part of the Constitutional design of our system and I consider Andrew Jackson a villain of history and good governance insofar as he was able to go farther than any other president to reverse this proper ordering. The array of images, gestures and protocols that presidents have at their disposal to reify this Constitution-turned-upside-down version of tripartite government is myriad.

Among them, and one that constantly annoys me, is the protocol of congress-president relations. The president deigns to speak to Congress once a year, and then only as a pretext for a television spot; the president is never required to submit to Congressional questioning; when the president wants to influence Congress, he stays put at 1600 and sends some flunkey down Pennsylvania Avenue; but when Congress wants to deal with the president, not just some charging, but the members themselves go, and then not some junior Representative, but only the highest ranking members are allowed to participate. It sends a clear signal of executive supremacy and Congressional supplicancy. The king keeps his court. Presidential aloofness is a show of presidential authority.

I have been impressed with President Obama’s first week in office. On Wednesday he suspended military tribunals; on Thursday he ordered the closing of the Guantánamo Bay detention camp, acts of confidence in the U.S. judicial system to handle these issues and a surrendering by the executive of the power of judgment and justice to its proper place in the Constitutional order. One branch accuses, another adjudicates: that is the division of powers. Also on Wednesday he ordered full compliance with the Freedom of Information Act and rescinded former President Bush’s order allowing the executive branch to resist normal declassification of presidential records. (Glaberson, William, “Obama Orders Halt to Prosecutions at Guantánamo,” The New York Times, 21 January 2009; Mazzetti, Mark , “Obama Issues Directive to Shut Down Guantánamo,” The New York Times, 22 January 2009, p. A1; Stolberg, Sheryl Gay, “On First Day, Obama Quickly Sets a New Tone,” The New York Times, 22 January 2009, p. A1)

But of the things that have impressed me so far, none has done so much as his visit to Congress today to meet with the Republican caucus to explain, to answer questions and to advocate for the administration’s stimulus plan (Zeleny, Jeff, “Obama Visits Capitol to Press Republicans on Stimulus Plan,” The New York Times, 27 January 2009). This is how a president should behave toward Congress: as a co-equal branch.

I fear that Congressional Republicans plan on dealing the Obama administration a souring lesson on partisan intransigence in Washington, D.C. and that the administration will revert to presidential maximalism, but I hope (there’s that word again) that this is the start of a presidency of true consultation and of executive restraint. Such an example would be an accomplishment of its own.

What occurs to me is that in a transparent society, there is massive economic value attached to peculiar intelligence. This is because if everyone can see everything else, the best way to gain advantage is to have something that nobody can understand even if they see it. And it’s quite possible that, even if they know that’s your explicit strategy, others can’t really do anything to thwart it.

Yes, a transparent society could decide to outlaw inscrutability. But this would have terrible consequences, because nearly all radical advances are initially inscrutable. Inscrutability is dangerous. But it’s also, almost by definition, the only path to radical growth.

I argued in a recent blog post [“The Inevitable Increase of Irrationality,” 25 November 2008] that part of the cause of the recent financial crisis is the development of financial instruments so complex that they are inscrutable to nearly everyone — so that even if banks play by the rules and operate transparently, they can still trick shareholders (and journalists) because these people can’t understand what they see!

But it seems that this recent issue with banks is just a preliminary glimmering of what’s to come.

Inscrutability, peculiarity, the idiosyncratic are already creeping in. Mr. Goertze is right to point to the rise of the quants and mathematical finance as an example. The one that comes to mind for me is the Napoleon Dynamite problem.

NetFlix has announced a million dollar prize for anyone who can improve the precision of its recommendation engine by ten percent. The New York Times Magazine and NPR’s On the Media both did stories about it back in November (Thompson, Clive, “If You Liked This, You’re Sure to Love That,” 23 November 2008; Gladstone, Brooke, “Knowing Me, Knowing You,” 21 November 2008). It turns out that improving the quality of this sort of singular value decomposition algorithm is geometric in difficulty. Most movies are easy to predict whether someone will like or dislike them, but a small number of odd movies thwart the algorithm. Chief among them is Napoleon Dynamite. For the research group profiled in The New York Times piece, Napoleon Dynamite was responsible for a whopping fifteen percent of all recommendation errors. There is no telling on the basis of people’s past movie rating history whether or not they’ll like this movie.

But the Napoleon Dynamite problem isn’t a solitary anomaly, but rather the paradigm of a trend. What we have is a Hollywood focused on these monster, expensive productions. Increasingly the movies that Hollywood makes are global products, with as much revenue coming from abroad as from the U.S. audience, so Hollywood is careful to strip its movies of any dialogue, humor or situations which are culturally nuanced and might not translate well. So the plot and dialog that we get in big Hollywood movies today is only the most broadly recognized and basic cultural tropes. Also, Hollywood has jacked the price of a movie up to the point where viewers now almost universally make a theatre-rental division: big special effects movies that they want to see in the theatres, and the dramas for which screen size isn’t a factor. It is a division with a positive feedback loop in that movie makers are aware of it and now shape their product offerings around it.

For a particularly depressing take on this, give a listen to Malcolm Gladwell’s 2006 New Yorker Festival talk on the use of machines to produce blockbuster scripts. At the same time that institutions like NetFlix are using computers to match customers to movies with increasing efficiency on the consumer end, Hollywood is using computers to make films increasingly easy to pigeonhole and match to demographics on the production side. It’s post-Fordist cultural production perfected. Soon we will be able to take the human out of the equation and the entertainment industry will just garnish out wages.

But there is — as is always the case — a countervailing motion. Just as Hollywood productions become increasingly trite and formulaic, there is the rise of these wildly bizarre and idiosyncratic films like The Zero Effect, Adaptation, Eternal Sunshine of the Spotless Mind, Lost in Translation, The Royal Tenenbaums, I ♥ Huckabees, Burn After Reading and so on. There is this sort of shadow Hollywood with it’s own set of stars and directors branding the alt-film genera: Wes Anderson, Charlie Kaufman, the Coen brothers, Catherine Keener, John Malkovich, William H. Macy, Frances McDormand. I would be remiss if I didn’t mention Steve Buscemi here.

What we have is a hollowing out of the middle. Along a spectrum, films range from obscurantia to formulaic. In the past, most movies probably fell in some broad middle: accessible, but unique. And most movie watchers probably fell there too. But increasingly movies and the movie-watching audience is being polarized into the genera constellations at one end and the difficult to categorize peculiarities at the other. Notice that the ambiguity of suspense has been replaced by the spectacle of gore in horror; that the sort of romantic comedy for which Drew Barrymore was designed and built has completely driven the older adult romantic drama to extinction. Similarly, the sort of accessible quirky, artiness represented by Woody Allen has moved much further down the spectrum of the idiosyncratic. The people who didn’t like Woody Allen are utterly baffled by Wes Anderson.

To generalize: hitherto we have been a normal distribution society. The majority of people fall into the broad middle and are closely related. But increasingly we are on the way toward a parabolic, or inverse normal distribution society, where the preponderance resides at the antipodes and people are separated by wide gulfs. This is true across the cultural spectrum, whether it’s politics, religion, the professions and so on. In the United States it is almost happening physically with the costal regions swelling as the center of the country is abandoned to satellite guided tractors and migrant labor. Some might call this the condition of postmodernity, some might call it the dissolution of Western Civilization.